Stocks Show Modest Losses Day After Tumble

Wall Street Wobbles After Sell-Off As Fed Chair Stresses Importance Of Financial Sector

(CBS/AP)  Investors bruised by Wall Street's latest rout found little reason to pile back into the market.

Stocks extended their losses in an erratic session Tuesday as investors wrestled with the reality that the economy is still far from a recovery. The pessimism that has dominated the markets for months stifled some tentative bargain hunting and in the process unraveled several attempts at a rally.

The selling pushed the Standard & Poor's 500 index to its first close below 700 since Oct. 28, 1996. But the losses were modest compared with Monday, when the Dow Jones industrial average tumbled 300 points and both the Dow and the S&P 500 index registered their lowest finishes in more than a decade.

Tuesday's fluctuations came as Federal Reserve Chairman Ben Bernanke told Congress an economic recovery depends on the government's ability to stabilize weak financial markets. He said the efforts were needed to avoid "a prolonged episode of economic stagnation."

Investors are still worried the government won't succeed. On Monday, the government injected $30 billion to troubled insurer American International Group Inc., its fourth attempt to stabilize the company since September.

Bernanke's remarks came as the central bank announced it would begin lending up to $200 billion in an initial move to spur consumer and small business borrowing for autos, education, credit cards and other expenses. The Fed first announced the plan late last year.

That offered some support to the market and helped curb selling, traders said.

"I think people are just finally happy to see that it's here and that it's going to begin," said Joe Saluzzi, co-head of equity trading at Themis Trading LLC. "Normally Wall Street will buy the rumor and sell on the news but I think this is kind of the opposite effect."

According to preliminary calculations, the Dow fell 37.27, or 0.6 percent, to 6,726.02. The index is now down more than 52 percent from its record of 14,164.53 set in October 2007.

Broader stock indicators also fell. The S&P 500 index slid 4.49, or 0.6 percent, to 696.33.

The Nasdaq composite index fell 1.84, or 0.1 percent, to 1,321.01.

The Russell 2000 index of smaller companies fell 6.79, or 1.9 percent, to 361.01.

Two stocks fell for every one that rose on the New York Stock Exchange, where volume came to a moderate 1.9 billion shares.

Saluzzi said a rise prices of commodities like oil led to some speculation that global demand for raw materials could soon increase.

Light, sweet crude rose $1.50 to settle at $41.65 a barrel on the New York Mercantile Exchange. May copper futures rose 8.85 cents to $1.6045 a pound, the highest close since Feb. 9.

Investors showed little reaction to testimony from Treasury Secretary Timothy Geithner, who told the House Ways and Means Committee the added spending in the Obama administration's budget is necessary because the previous administration was unwilling to make long-term investments in health care, energy and education.

President Barack Obama on Tuesday likened the stock market to the daily tracking polls used during campaigns. He said tracking Wall Street's "fits and starts" too closely could lead to bad long-term policy.

Many investors remain fearful of buying into a market that has dashed investors' hopes that it had hit bottom. Last week, the Dow and the S&P 500 index fell through their November lows and, with their continuing pullback, are touching off fears that a new torrent of selling would take place.

Brian Reynolds, chief market strategist at New York-based WJB Capital Group, said the stock market's slide means it could be ripe for a bounce but that a lasting recovery won't come until credit market investors begin to put money into riskier debt that is now out of favor. Investors have been buying the safest types of debt, like government bonds, in favor of mortgage and credit card debt and some corporate debt.

"It's just another continuation of what we've seen for the last year and a half. If you compare the valuation in stocks to the valuation in credit, there is a huge disparity there," Reynolds said.

He contends the S&P 500 index, which is down 22.9 percent in 2009, will continue to fall until it hits the 600 level. That would be a loss of another 13.8 percent.

Investors are also beginning to look toward the Labor Department's February employment report, which is set for Friday. The monthly employment figures are one of the most important economic barometers because rising unemployment cuts into how much consumers spend. Consumer spending accounts for more than two-thirds of U.S. economic activity.

Government bonds were mixed Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.89 percent from 2.87 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, slipped to 0.26 percent from 0.27 percent from Monday.

The dollar was mostly lower against other major currencies, while gold prices fell.

Overseas, Britain's FTSE 100 fell 3.14 percent, Germany's DAX index rose 0.52 percent, and France's CAC-40 fell 1.04 percent. Japan's Nikkei stock average slipped 0.69 percent.

[rhs648]

the investor's next step is off a cliff
Posted by jgg00000008

Not at all. Those of us who are investors see a lot of opportunities in this down economy and many of us have a bright outlook for the future of our economy. History as shown that our economy is resilient and has experienced severe shocks and ups and downs as far back as our history is recorded. This does not mean that all of us have confidence in what our government does at any one point in time.

[rhs648]

White House Knocks Jim Cramer For Calling Obama Budget "Greatest Wealth Destruction By a President"

I find it very scary the way Obama and his minions go after private citizens who disagrees with them.
Posted by vistavermin1

This is something which concerns me as well. Jim Cramer is both an entertainer and a market adviser. He provides his perspective and analysis to his viewers. Like a journalist or a reporter, he should be able to present his views freely and without a hint of intimidation by the government or representitives of the government or politicians who don't like what he says. Although President Obama and his people might not like what they hear, it is important that they not interfere with what many of us consider freedom of speech and freedom of the press. When used this way, press includes other forms of media such as radio and television.

[Meg003]

tj217-2009

Do you have no concern about the yellowcake that Saddam Hussein had stockpiled? You don't think that was for WMD? What DO you think was the purpose of the 550 tons of concentrated natural uranium?

[GODSnLIBERALS]

New World Order 2012

[kamsack50]

That's PHONY, that liberal excuse to approve war in Afghanistan "because Bin Laden is there".
They were trying to prevent the invasion of Afghan. in 2001! (Remember???)
Anyway, do you think liberals would have approved a Bush shift from Iraq to Afghan? Never. But it's fine because it's Obama doing it.
Racist phony liberals.

[rickwar98]

the investor's next step is off a cliff
Posted by jgg00000008 at 1:14 PM : Mar 3, 2009

Feed the fear!

Sorry, to burst your bubble, there is plenty to be made on the bottom.

[dsnj1-2009]

ok, lets think about this logically-if one is not 100% sure they will have a job tomorrow, they cannot invest, due to no assurance of future earnings (i.e. there is a possibility that one can lose their job- as is most of America at this point-if you think you are immune, do some research). Seriously, if you want to know the "state of the economy", talk to your neighbors, and if 1/5 lost their jobs, you have a pretty good indicator regarding if we are in a "recession", or a "depression"-from your findings, make up your own mind, and do not rely on these sites to relay this information to us- Please post your findings

[rickwar98]

yep and your king is cranking up in Afghanistan...so what's the difference? they both cost money and people will die....why is it with you dumbazz liberals it's ok if your king send soldiers off to battle but it was wrong with Bush. Furthemore in less than 3 years your king will have doubled Bush's deficit with no end in sight. Projections for the deificit 10 years from now at Obmam's current spending structure will put us at 23.1 trillion in debt equal to our GDP....enjoy the soupline
Posted by rudedogrulz at 12:06 PM : Mar 3, 2009


The Republican doom and gloomers just keep creeping out of the dead wood. It's amusing, they and their policies brought this diaster after 25 years of smoke and mirrors. Now they think they can fix it.

Republicans new motto: "If we can't fix it up, we'll f**k it up--again."

[philabias]

OBAMA SEEKS TO PUNISH RICH ( THOSE WHO COULD INVEST AND HIRE )
OBAMA SEEKS THE LARGEST GOVERMENT EVER ( NO PRODUCT OR PROFIT )
THIS WILL MAKE IT WORSE.
RICH INVESTS ELSEWHERE 0UT OF OBAMAS REACH AND WE GO DOWN THE TOILET.
OBAMA IS A COMPLETE LIBERAL SUCCESS
U VOTED 4 THIS AMERICA

[bubba027]

Man i have went through a lot of money in my life and had a good time doing it but i was smart enough not to give any to wall street put my money in Gold bought my first in 1952 at $33.00 per ounce bought a lot from 52 until 72 and all i will say is a metric tonne is worth today about 30.5 million
Posted by aheadace at 11:06 AM : Mar 3, 2009

You're lookin' like a genius now. Over that time period gold has only averaged about 4% growth (not counting the last 1 -2 years), but you haven't lost practically everything like most of us. I hope you have it in a safe place.

[bubba027]

bubba is a redneck republiCon, the truth does not matter to such people
Posted by pythoncharly at 11:01 AM : Mar 3, 2009

Your clearly in denial. Even the mainstream media is trashing just about everything obama has done or plans to do. The stock market is tanking, yet you can't understand this is a bad thing, very bad thing.

[bubba027]

Here's LOGIC for you. Exxon and other domestic oil companies produce about 2% of the oil in the world. The US imports about 70% of oil we use. I know, let's reduce the number of leases the domestic companies can use to produce oil and, hey, why don't we tax the hell out of the rest of the Oll produced in and off-shore of the US (that use American workers). that ought to reduce our dependence on foreign oil and reduce the price of fuel. Doesn't really make sense does it?

That's exactly what your buddy Obama has done. That's only one thing he's doing to ruin the economy. Can't blame Bush for that.

[bubba027]

Everyday Obama make GW Bush look better and better.
Obama is Jimmy Carter 2 only worse.
_________________________________________________________________
And, you're basing your opinion off of what facts? The economy? Oh, you mean the ecomony he's been in charge of for less than three calendar months? Also, if I recall, the recession is believed to have started towards the end of /07, or definitely in '08. The man didn't even take office until 2009. Try all you might, but this is still Bush's recession, until you see some effect, good or bad, from Obama's policies. And they say Republicans have abrain. How silly...
Posted by tj217-2009 at 10:38 AM : Mar 3, 2009

Apparently you have processing problems. The market has been tanking since it became apparently Obama, the most liberal Senator, was goling to win the presidency. The market has dropped nearly 2000 points since Obama has taken office. We're clearly seeing incredibly bas impact on the economy as a result of Obama's Tax and Spend policies. The cat is out of the bag. This is Obama's economy now.

[berniew4]

ONCE AGAIN I READ A BLOG FROM tj217-2009 SAying EXXON is bad. OH YEAH theses idiots keep saying . If you are successful ., make a profit, Have no massive layoffs. AND YES pay fed taxes to USA . and DO not need a bbailout you are BADDD . I giveup . Common sense is indeed dead..

[berniew4]

face reality ?? wHY NOT SAY obama THAT THE GOVT WILL STOP ALL BAILOUTS AND STIMULUS HANDOUTS AND PORK PROJECTS. THEN TELL ALL HEALTHY BUSINESSES LEFT AND ALL EMPLOYED Ameri cans to spend spend spend. / Make some kind of tax break if you spend spend spend . This will stimulste the ECONOMY with NOOO govt help and put others to work and help investers to have confidence in the USA. Too simple ? Cannot be done because OBAMA<PELOSI and REID want people dependent on THEM !!

[scb1111_1]

Bill Clinton joked about Barack Obama following the playbook of Jimmy Carter? Obama is Jimmy Carter, Jr.?

[scb1111_1]

Obamanomics under attack by the DumboCraps? Chris Dodd who is bought and paid for by the Healthcare and Insurance Industry says the Healthcare is "dead on arrival" in the Senate? Virginia, Pennsylvania and other coal state's DumboCraps stated that "cap and trade" will keep the coal industry and the United Coal Miner's Union.

[rickwar98]

2001, Alan Greenspan told us he has "long argued that paying down the national debt is beneficial for the economy: It keeps interest rates lower than they otherwise would be and frees savings to finance increases in the capital stock, thereby boosting productivity and real incomes."

What are we shifting away from? A lot of things, but one of the biggies is an economic cycle that fueled the past decade. It went something like this:

We needed ultra-low interest rates after 9/11.
Those low rates fed insatiable demand for housing (real estate was especially attractive, because investors' fingers had just been burned by the dot-com bubble, so stocks were taboo).
Rising home values led to a surge in consumer spending -- funded by debt, of course.
Spending sprees led to massive trade deficits.
Massive trade deficits led to massive capital inflows by foreign investors.
Massive capital inflows kept interest rates low.
low interest rates? We're back to square one!
Repeat cycle until wealthy.

Now comes the cleanup. Notice this went on for over a decade, PRIOR to Obama.

The real reason the market is down? They got caught, the banks got caught. Now they have to actually have some rules and oversight. Guess what? They don't like it and they've lived so long with no or weak rules they can't figure the right way to get going again.

45 days won't fix several decades of lax rules, it's going to take some time, it's going to hurt.

[rickwar98]

Posted by rickwar98 at 9:21 AM...it's all going down, 23 now, over 100 points later and ending down over another 200 for today! It's all DOWNWARD!
Posted by scb1111_1 at 9:26 AM : Mar 3, 2009

The sky is falling! The sky is falling!

So--how much do you actually have invested in the stock market? How much investing have you ever done? Are you old enough to know what a bear market is?

The simplicity of your answers shows your depth of understanding, impress us some more please.

[pensacola8-2009]

The Bush Administration did not create this mess all by itself. Average citizens made loans and used more credit than was realistically needed. They converted from being investors to becoming borrowers and started "Renting Money". Many, but not all citizens who did this, defaulted and committed a civil violation, while others did not ever intend to repay their loans and committed a criminal violation.

It will take until August of 2009 to May 2010 for many to see the bank capital problems to return to positive numbers in the first wave of the recovery.

Those, who can accelerate repayment of their debts, make their personal contribution towards the economic recovery of the country. In May 2009, the market will reverse towards a climbing trend. Until then, it will flounder and wash out the weakest investors and firms.